Former House Majority Leader Dick Armey (R-Texas) said that the Bush administration’s plan to buy $250 billion in stock in U.S. banks should be challenged in federal court as unconstitutional.

“I think that it is subject to a serious constitutional challenge,” Armey said in a conference call with reporters on Tuesday. “It is very important that this challenge be made. We had challenges of this nature against Roosevelt. I think it is extremely healthy that we challenge this, and it should be challenged.”

Freedom Works, the organization headed by Armey, is researching the possibility of a challenge to the plan.

President Bush announced Tuesday that the Treasury Department will utilize a little-known provision of the $700 billion bailout package approved last week by Congress to spend $250 billion to buy non-voting shares of stock (equity stakes) in nine of the country’s largest banks.

Never mind President Bush’s plan to buy bank stocks… What about the whole $700 billion Bush/Bernanke/Paulson bailout plan… Is it Constitutional?

One of the things that bothered me about the rush to ram that crap sandwich down taxpayers throats was the lack of debate. We never got answers to the most fundamental question is this plan Constitutional?

Community banking executives around the country responded with anger yesterday to the Bush administration’s strategy of investing $250 billion in financial firms, saying they don’t need the money, resent the intrusion and feel it’s unfair to rescue companies from their own mistakes.

But regulators said some banks will be pressed to take the taxpayer dollars anyway. Others banks judged too sick to save will be allowed to fail.

The government also said yesterday that it will guarantee up to $1.4 trillion of private investment in banks. The combination of public and private investment is intended to refill coffers emptied by losses on real estate lending. With the additional money, the government expects, banks would be able to start making additional loans, boosting the economy.